Hindalco share price gains 2% post Q2 results; brokerages express mixed views | Mint
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Business News/ Markets / Stock Markets/  Hindalco share price gains 2% post Q2 results; brokerages express mixed views

Hindalco share price gains 2% post Q2 results; brokerages express mixed views

Hindalco Industries reported in-line profit for Q2 and brokerages have mixed views on earnings. Nuvama Institutional Equities maintains 'Hold' with a target price of ₹552, while Motilal Oswal Financial Services reiterates 'Buy' with a target price of ₹580.

Hindalco share price today opened at ₹483.40 apiece on BSE. Premium
Hindalco share price today opened at 483.40 apiece on BSE.

Hindalco share price gained 2% on Monday's trading session following Hindalco's Q2 results, where the company announced in-line or flat profit for September quarter and brokerages expressed mixed views on Q2 earnings. Nuvama Institutional Equities has maintained ‘Hold’ on the stock with a target price of 552, while Motilal Oswal Financial Services has reiterated 'Buy' stance on the stock with a target price of 580 and sees potential upside of 21% from Friday's close price of 481. Hindalco share price today opened at 483.40 apiece on BSE

“The stock prices are up by a 1% at the time of writing however we are seeing significant volume in the first couple of hours, the prices have come off form the morning highs but the formations looks strong and expect upmove to continue in near term. possibly prices may extend towards 510 in near term with 480 as support," said Rajesh Bhosale - Equity Technical and Derivative Analyst, Angel One.

Also Read: ONGC share price declines over 1% post Q2 results. Should you buy, sell or hold the stock? Check brokerage views

For the quarter that ended in September, Hindalco Industries Ltd, the flagship company of the Aditya Birla Group, reported consolidated profits of Rs. 2,196 crore, which was flat year over year. Overall revenue from operations was 54,169 crore, a 3.7% YoY drop mostly attributable to a drop in copper prices around the globe.

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Consolidated earnings before interest, tax, depreciation, and amortisation (Ebitda) increased by 6% year over year to 6,096 crore, with an Ebitda margin of 11.25%. With a 12.34% increase from the same time previous year, segment Ebitda was recorded at 6,896 crore.

Also Read: Hindalco Q2 Results: Net profit flat at 2,196 crore

“We have maintained momentum driven by our focus on cost control and a solid performance by all our downstream segments. Copper business delivered its best-ever quarterly results backed by record metal sales. Aluminium India upstream Ebitda rose by 7% over the first quarter supported by higher volumes and lower input costs. Aluminium India downstream business Ebitda increased 16% sequentially due to higher volumes," said Satish Pai, managing director, Hindalco Industries.

Let's see what the brokerage has to say about the Q2 results and their evaluations and rating for Hindalco stock:

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Nuvama Institutional Equities

The Indian unit of Hindalco, which includes Utkal Alumina, reported higher-than-expected Q2FY24 EBITDA of 2,402 crore, an increase of 7% quarter over quarter. The beat comes from higher-than-expected earnings from its copper division, while EBITDA for aluminium was in line with estimates at 2,160 crore (up 7% QoQ). Due to higher volumes, Copper EBITDA, at 653 crore (up 23% QoQ), above the brokerage's expectation by 25%.

“India’s aluminium business profitability hinges on aluminium prices, which are range-bound. CoP is likely to remain flat QoQ. Novelis earnings shall stay firm at USD525/t from Q4FY24E post a seasonally weak Q3. Maintain ‘HOLD’ with a target price of 552, valuing India business at 5x and Novelis at 6.5x FY25E/26E average EV/EBITDA," the brokerage said. 

Motilal Oswal Financial Services

Hindalco's consolidated revenue for the second quarter of FY24 was 54,200 crore, 13% more than the brokerage's estimate of 47,800 crore, but down 4% YoY. Record shipments helped the copper industry's revenue to soar, but the aluminium vertical's revenue declined as a result of falling metal prices. Consolidated EBITDA rose 5% YoY to 5,600 crore, matching the 5,400 crore expectation provided by the brokerages. Lower input costs and a decrease in power expenditure contributed to an improvement in EBITDA.

“Despite global macro uncertainties, a rebound in demand is anticipated across all the segments. This resurgence is expected to be driven by increased demand from EV, consumer durables, industrial machinery, infrastructure, and the construction sector. Volume growth across geographies is expected to remain stable going ahead and all the capex across all the geographies are on track. We believe that Hindalco is well placed to capitalise on the strong growth opportunity. We have raised our FY25E EBITDA/ APAT by 5%/3% due to improved outlook. We reiterate our BUY rating with an SoTP-based target price at 580," the brokerage said. 

JM Financial 

“Hindalco reported 2Q consol. adj. EBITDA of 5,640 crore, significantly lower than JMfe of 6,350 crore – mainly due to accounting adjustments arising out of conversion from US GAAP to IND AS. India aluminium business (incl. Utkal) delivered an EBITDA of 2,250 crore up 8% QoQ aided by lower costs and increased volumes. Hindalco, given about 70%+ steady/strong EBITDA being non-LME linked, remains our preferred play in the metal space. Maintain BUY," the brokerage said.

Also Read: Eicher Motors share price trades near its all-time high post Q2 results; what should investors do?

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.

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Published: 13 Nov 2023, 12:47 PM IST
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